Tomahawk, WI 7/29/2013 (Basicsmedia) – Sequenom Inc. (NASDAQ:SQNM) is a life sciences company with headquarters in San Diego, California. The company offers genetic analysis solutions on a global basis through its two segments, Genetic Analysis and Molecular Diagnostics. Sequenom shares dropped nearly 36% from $4.69 on July 24, 2013 to $3.30 July 25, 2013 after the company announced on July 24, 2013 that its loss increased in 2Q2013 to a whopping $31 million. This fall in stock value was in spite of the fact that the revenues surged 91% to $34.9 million from $18.3 million for the year ago period. However, revenues of Sequenom fell drastically short of analysts’ forecasts of $46.8 million for 2Q2013.

The loss per share of the company for 2Q2013 was $0.27, which was also much higher than the market expectation of a loss per share of $0.21. The company reported a GAAP loss per share of $0.27 against the loss per share of $0.26 for the same period last year.

The gross margin of Sequenom for 2Q2013 was 30.2%, while the operating margin was a negative 82.3%. Net margin of the company was also a negative 89.0%. Gross margin of the company declined sharply but operating margin and gross margin were slightly better compared to the previous year period, though they were negative.

The average estimate of analysts on Sequenom for 3Q2013 is revenues of $38.5 million and average EPS is estimate is a loss of $0.24. The market expects Sequenom to have revenues of $157.6 million for FY2013 and loss per share of $0.96.

The poor results of Sequenom resulted in three brokers slashing their ratings on the company stock and another three cutting their price targets for the shares of Sequenom. It appears that the significant loss encountered by Sequenom is mainly due to problems in cash collection because of Medicare changes. Further, it is obvious that the company is facing serious competition in its flagship product, MaterniT21, even though the volume of the tests for the product had remained flat. The number of tests with MaterniT21 was 38,000 out of the total tests of 46,700 ordered in 2Q2013. The annualized volume of the MaterniT21 Plus tests exceeded 150,000 samples at the end of 2Q2013.

Dr. Harry Hixson, Jr., Chairman and CEO of Sequenom commented, “We expect improvements in collections in the second half. We are taking actions to reduce costs and improve our overall financial performance, including curtailment of services for which there is no current reimbursement available.” The decision of the company to curtail certain services will definitely impact not only short term volumes but also the market share of Sequenom in the long run. Hence, analysts feel that there is a serious challenge to the long term prospects of the company.

To compound matters further for Sequenom, the Law Offices of Howard G. Smith in Bensalem, Pennsylvania announced that it will be investigating certain potential claims of several investors of the company. The claims relate to possible violations of some federal securities laws. The Law Firm will be focusing on a few statements that the company issued between May 9 and July 24 regarding its financial performance and business operations. The announcement of this investigation, coupled with a huge loss in 2Q2013 resulted in a sharp fall in the share price of Sequenom on July 25, 2013.

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